So far in 2014 there has been just under $344bn of global syndicated loan activity, according to Dealogic figures. That puts the year only $34bn behind where volumes had reached at this stage in 2013, although last year’s final total reached $626bn — a figure that looks out of reach if the sanctions battered market for Russian loans fails to recover anytime soon.
There has only been $7.3bn of Russian loans agreed this year from just 13 deals, says Dealogic — a long way off the $35.4bn and 26 deals at this stage in 2013. That gulf could widen further if tensions between Ukraine and Russia escalate further, as Russia accounted for $45bn of 2013’s loans volume by the end of the year.
But BRICs volume in general is down, with China more than $10bn behind last year’s total to date, at $47.4bn. The number of loans tranches has increased, however, at 174 — from 171 by this time last year. China more than doubled loan volume in the closing months of 2013, with a full year total of $97.7bn.
Out of the BRICs countries, only India has seen an improvement in volume so far this year, with $49.7bn — up from $39.5bn.
Along with Russia, the other big drop off in loan volumes so far this year has been in Turkey. Deals are less than half what they were at this time last year, with just $12.9bn (19 tranches) — down from $25.9bn (39 tranches).
However, as such Turkey might be one area where the EM loans market can catch up in the second half of the year. Much of the fall in deal flow is likely attributable to uncertainty around the country’s first direct presidential election, but with the success of Recep Tayyip Erdogan widely seen as having a stabilising effect there could be more encouragement once again for borrowers to return.
However, one loans banker said that the market should not expect too much to come out of Turkey - even if banks are looking to put money earmarked for Russian borrowers to work elsewhere.
"The difference in volume from last 2013 is mainly that there were some chunky one-off corporate deals, such as the $4.7bn around Oger / Turk Telekom," said the banker. "You may well not see those kind of deals again this year - certainly not from the same borrowers. The Turkish financial institutions market has been very resilient and all of the rollovers have been well committed. But those refinancing rounds are typically similar and fairly predictable so there won't be much change in volume from that area."
The banker added that much of the Turkish loan volume outside financial institutions came from project financing and local market club deals.
"Without those deals, the numbers haven't fluctuated that much," he said. "If you move away from the FI space the international bank lending levels are less competitive, so borrowers prefer to go with local banks. Borrowers have also been quite liquid and have been able to fund themselves in the bond market."
Last week saw Akbank increase the number of bank commitments with its second refinancing of the year, for which it paid the same all-in rate but a 5bp wider margin. Yapi Kredi and Isbank are due to follow soon.